Interpreting financial statements requires more than just looking at the numbers. Entrepreneurs need to understand the financial ratios that provide deeper insights. Some important ratios include:
Current Ratio: This measures the company's ability to pay short-term obligations. Debt-to-Equity Ratio: This shows the proportion of debt and equity used to finance the company's assets. Return on Equity (ROE): This indicates how well the company is using investments to generate earnings growth.